Law in eighteenth-century England was the central legitimising ideology, ousting the religious authority and sanctions of past centuries. Arising out of struggles between the monarchy, parliament and the courts, the rule of law sought to protect individual liberty and private property by placing constraints on arbitrary authority. All citizens from the monarch to the poorest were bound by the rule of law and could settle their disputes in the courts presided over by judges, who were independent of manipulation.

The ideology and practice of the rule of law was in theory exported to Britain's colonies and embraced their Indigenous peoples, whose own laws and customs were usually ignored. But much depended on the circumstances of the colony. In the penal colony of Van Diemen's Land the court system was a travesty of the rule of law. In 1816 a deputy judge advocate began to hear in the Lieutenant-Governor's Court civil cases dealing with amounts up to £50, but the colony did not have a resident judge until the Tasmanian Supreme Court was created in 1824, and colonists were unwilling to spend money prosecuting cases in Sydney. Despite lacking legal authority, powerful lay magistrates heard many capital cases and imposed severe sentences, such as flogging. In many criminal cases, the offenders escaped punishment or were punished contrary to law. The arbitrary imposition of the criminal law engendered 'a deeply honed resentment of government'. Lieutenant-governors issued their own General Orders to regulate conduct and imposed martial law where necessary to ensure order.

The situation became worse in 1824 with the appointment of Lt-Governor George Arthur, a strict disciplinarian. After the Bigge Report criticised lax convict administration, Arthur was enjoined to raise convict discipline to new levels to make transportation feared by British criminals and to ensure that justice was uniform and certain. He created a highly centralised police system and ruled more autocratically than previous governors. In 1825 Van Diemen's Land secured administrative independence from New South Wales and was granted an executive council, a form of cabinet comprising senior public servants, and a legislative council, whose members included the members of the Executive Council and some free settlers chosen by Arthur. The Executive Council and the Legislative Council invariably rubber-stamped Arthur's policies and legislation. In practice he preferred not to pass laws but issue General Orders to regulate colonial affairs. Arthur also expected the Supreme Court, formed in 1824 with the arrival of John Pedder as Chief Justice, to uphold his autocratic rule. By holding a seat on the Executive Council (until 1836) and the Legislative Council, Pedder subordinated the judicial arm of government to the executive and weakened confidence in his impartiality.

Arthur opposed the notion that no colonial laws should be implemented unless 'adapted to the spirit of the British Constitution'. Those who 'knowingly' emigrated to a convict colony, in effect 'an immense Gaol or Penitentiary', should not expect 'to retain every immunity and privilege' they enjoyed in England and should 'abide cheerfully by the rules and customs of the Prison'. This view antagonised many free settlers, especially the gentry, who saw the supremacy of the rule of law, the ability to seek redress for grievances in courts presided over by an independent judiciary, legislative representation and trial by jury as crucial restraints on arbitrary power. Support for these measures 'increased as the free element in the population became proportionately greater'. Finally, in 1830 an ordinance empowered a judge to allow a jury in civil cases if desired by either party.

The 1840 removal of military juries reflected a change in policy under Lt-Governor John Franklin. He opened legislative council proceedings to the public and supported greater government accountability. Except for convict administration, government authority became more dependent on legally defined rights and obligations than on the whim of the lieutenant-governor. Franklin favoured reforming and updating criminal and other laws in line with liberal thinking in Britain. The rule of law thus became more entrenched. This made it uncomfortable for Lt-Governor William Denison, who had undemocratic tendencies and railed against interference with his wishes. He tried to remove the two Supreme Court judges when they ruled a dog tax illegal in 1847. The Colonial Office told Denison to defer to judicial decisions and only challenge them in court, thus firmly establishing judicial independence. Tasmanian judges used British precedents in making their judgments until well into the twentieth century.

Denison tried hard to hold back representative government but failed. A partially elected Legislative Council was secured in 1850 and self-government in 1855. From 1856 the Tasmanian parliament had the authority to make laws for the conduct of local affairs and those statutes became increasingly important. The legal foundations of today were established in the 1850s and, despite passive resistance in the late nineteenth century to particular laws, such as those relating to carriage taxes, scab and railway rates, Tasmanians remained committed to the rule of law. Most law until the 1970s was derived from Britain. At times, reforming attorneys-general like Andrew Inglis Clark attempted to modernise the statute book, but generally Tasmania lagged behind in legislative change. In 1941 a Law Reform Committee attempted to update some areas of the law, but more systematic and wide-ranging reports were produced by the Tasmanian Law Reform Commission, which operated from 1974 to 1989.The Commission was replaced by a single Law Reform Commissioner from 1989 to 1997. A Law Reform Institute has been active in the Faculty of Law, University of Tasmania since 2001.